Transcription

2 MIT SLOAN MANAGEMENT REVIEW Organizational Alignment is Key to Big Data Success NewVantage Partners cofounder Randy Bean reveals how veterans of big data management are dealing with the new era of Big Data. RANDY BEAN (NEWVANTAGE PARTNERS), INTERVIEWED BY DAVID KIRON Fortune 500 companies are rushing to make big data investments. Who is leading this charge? What are they doing? What are they trying to avoid? A recent survey of C-level and function heads from Fortune 500 companies offers a unique glimpse into how the captains of industry are thinking about big data and how their companies are changing because of new insights gleaned from big data analyses [see Randy Bean, a coauthor of the survey and cofounder of NewVantage Partners, which sponsored the study, sat down with David Kiron, executive editor of MIT Sloan Management Review's Big Ideas initiatives, to discuss how top executives at some of the largest companies and organizations in the United States are managing big data. Tell us about the survey and who you focused on. We conducted the survey in June and July of It came out of our executive thought leadership breakfasts and dinners, where we bring together CIOs, CTOs, chief marketing officers and the chiefs of analytics from Fortune 500 companies. The survey was biased to organizations that have participated in our executive discussions. About 53% were financial services firms, which include banking, asset management firms and major credit card companies. Another 19% were insurance firms. If you put those numbers together, almost three-quarters of survey participants were from some form of financial services firms. All of the respondents were senior executives in the C-suite or a level or two below. So, this was a unique perspective on what top executives in very large companies are thinking about big data. We had over 50 senior executives complete a very detailed set of 65 questions. Part of the motivation for doing the survey was that we had heard from many of those surveyed that they wanted to know what their peers were doing in terms of big data. Was big data a real phenomenon across their industry? What kinds of investments were organizations making in big data? What type of applications were they looking at? And did they have people with the right skills to execute big data initiatives or did they need to find people with these skills? What was the big overall message from the survey? 1 SLOANREVIEW.MIT.EDU

3 There were several key themes. One was the promise of improved data-driven decision making. Everybody agreed on that in principle. All organizations expressed an interest in being able to do that, though what that means for different organizations varies. Some organizations are focused on strengthening their customer relationships; others are focused on managing business and systemic risk. Eighty-five percent of respondents said they had a big data initiative planned or in progress. Many of these were internally facing, such as improving operational efficiency or the risk environment in the context of Dodd-Frank; [some were] externally facing -- how to improve your customer experience or the process of retaining and developing your customer relationships. Probably the most interesting finding for us was that with these large corporations, it was all about managing the variety of data and not so much about managing the volume. The issues weren't incorporating larger and larger volumes of information. Most of these firms have been used to dealing with large volumes. That wasn't the critical issue. It was about integrating information from diverse sources. Across the board, that was really the primary focus of how firms wanted to use big data, and that included incorporating unstructured data. We were a bit surprised that only 3% said that they cared about social media information. It's just not in the plans. Some planned to do some very minimal customer sentiment type of analysis, but it's not top of mind with the large organizations. Another key finding was that organizational alignment is a very critical factor in ensuring success. There was some division in terms of whether ownership for big data initiatives resided on the business side or the technology side, but there was common agreement that unless the business and technology sides worked together so that there was an understanding of the business objectives and the technology capabilities, a big data initiative would not be as successful as it should be. The final key finding was about a major roadblock to success, which is having the right people in place with the right skills and the right organizational structure to use big data. There's been a lot of talk in the news about the lack of data scientists. Is that really a big obstacle with rolling out big data initiatives? Well, it's a popular topic right now, and we do see a lot of organizations saying that they need to go out and hire new people. But we don't really see a lack of talent as the most critical factor to successful big data initiatives. For us, the critical factors are primarily organizational alignment -- getting the business and technology organizations to work together on the common objectives, understanding what the business objectives are and understanding what the technology capabilities are that will support those. You mentioned that for many companies in your study, the big issue was variety rather than volume. What does "variety" mean in this context? Well, there are two points here. One is from Tom Davenport, with whom we coauthored a recent piece in MIT Sloan Management Review on how big data is different [see edu/x/54104]. Tom has pointed out elsewhere that it's not really the size and volume of the data. It's the quality of the problem. The point there is that ultimately, organizations are trying to gain insights. That can be from small subsets of data or very large sets of data. So you don't want to lose sight of that. The other point is that most Fortune organizations, particularly in financial services, are focused on integrating a variety of sources of data, including unstructured data, such as legal documentation, trusts, stock filings, corporate actions. Traditionally, they haven't been able to marry that type of information with structured data, and that's one of the big areas where organizations perceive that big 2

4 data can help them. We believe that big data enables big questions. What is an example of an important business problem that can be solved with a big data analysis of legal documents? Take corporate actions. These are important to every financial services firm and apply to activities like mergers and acquisitions, financial reporting and any type of activity that's produced in terms of an announcement. Markets tend to react to the information that's in these corporate actions. So organizations are trying to correlate corporate actions to actions that take place in the market. In order to do that, they need to take this narrative content and transform it in a way that they can analyze. If they can do that effectively, they will be able to discern patterns that will help them make quantitative decisions based on, essentially, qualitative information. Who seems to be getting big data and who isn't? Let's talk about that in terms of the industries you've looked at. One difference is between how financial services and the government deal with big data, though they both get the importance of it. I had the opportunity earlier this year to visit the Pentagon and meet with the assistant secretary of defense and learn about their Data-to-Decisions program. On one hand, their program is similar to what we see in financial services and private industry around accelerating time-to-answer. How do you translate and analyze vast amounts of data to gain key insights and accelerate that process so you can get from this data to the insights? But, what was interesting and different about the government and the Defense Department in particular, is that they have information primarily from sensor devices. Think of it as drones and other types of satellite telemetry. They're trying to think about things like troop movements and activities of that kind, and often the consequences are much higher, at least in human terms. In financial services, the risk is obviously different -- incorrect financial reporting, which has different kinds of consequences. In the context of the Department of Defense, the decisions can be life and death in terms of whether to mobilize troops or to launch a missile. So the human stakes are certainly higher and the volume of information that is available through these sensor devices goes far beyond what the traditional analyst communities deal with. After all, there are thousands of intelligence analysts in numerous government agencies. The degree that technology can enable a more sophisticated, faster ability to sift through this information is critical to their mission. Whether it be the intelligence community or financial services community, we see this ability to accelerate time-to-answer as being a key metric that quantifies business or intelligence value. Who is making big investments in big data? About 85% of respondents said they had big data initiatives planned or in progress. Only 15% of respondents said they had nothing planned right now. In terms of level of investment, 24% said they were investing more than $10 million now, and that was projected to go up to 36 % in the next several years. There were a handful of organizations that indicated they plan to invest more than $100 million within the next three years. The 15% who aren't investing indicated that they either have no big data initiatives planned at this time, don't see an immediate impact and relevance to their business, or believe that, while there's an opportunity to utilize analytics and big data in a more institutionalized nature within their business and improve their ability to have more data-based decision making, they are not precisely sure where it fits in at this time. So it varies. For some organizations, particularly in the credit card industry, data is their lifeblood in terms of decision making. They have set up robust 3

5 discovery environments that have existed for many years. They establish champion-challenger analytic techniques, test-and-learn environments, and recognize data as integral to everything they do. They're really data-based marketing companies. But that's in contrast to more traditional types of financial services firms. Who are investing the most and least in Big Data? If you speak about financial services broadly, the credit card companies are large investors in big data, and for a couple of credit card companies in particular, data is integral to their whole reason for being, so it's probably their most important asset --- their analytics and data capabilities. Insurance providers are one of the more interesting and exciting areas because they've operated in a very traditional marketplace until now, but they have to adapt to the new regulatory environment. Insurance organizations will have to become much more competitive and cost driven and will have to understand their customers better. In light of the new healthcare laws, they have to tailor insurance programs and care programs to support their customers, and that means they need to have much more robust analytic and data capabilities. One of the largest insurance companies in America that we deal with recently hired somebody from one of the very large credit companies to bring to bear an analytics capability. They are going to have to fight constantly to make their case why certain decisions should be made based on the new analytics. But that will be an industry that probably transforms more than any other over the next decade in terms of utilizing data to drive their activities. Where most of the data analysis takes place in insurance firms is in the establishment of what they call informatics functions -- the term used within insurance companies for what might be known in other industries as analytics or database marketing. That is going to have to change in order for them to compete effectively under the Patient Protection and Affordable Care Act, otherwise known as Obamacare. Is big data changing the role of IT in strategic decision making? That's a controversial and lively question. My colleague Paul Barth was recently a keynote speaker at the MIT Chief Data Officer Forum, and Paul put forth the hypothesis that the rise of the chief data officer may mitigate the need for chief information officers. He suggested that chief information officers had really become infrastructure officers, and with so much of infrastructure activities migrating to the cloud, the CIO role was becoming less and less relevant to organizations. So Paul asserted that the CIO role would go away within ten years and the chief data officer would become the dominant role, particularly in terms of guiding an organization's information strategy. He threw this out to be provocative in an academic discussion setting, and to his surprise most of the CIOs in the audience as well as the chief data officers agreed with him and said that they envisioned this as well. Two years ago, we really hadn't heard of anybody in the chief data officer role, but in the past two years virtually all of the major US banks as well as many of the asset management companies and credit card companies have named somebody to the role with the title of chief data officer. What's interesting to us is that even though people have been named chief data officer, where this role resides in the organization varies. In some instances, it reports up to the CIO or chief administrative officer. In other instances, we see it report up to the CFO or to a line of business executives such as head of strategy or chief operations officer. We have also seen in one large client organization that the role has been structured so that it reports half to the business side with responsibility for analytics and half to the technology side with responsibility for data governance and data standards. 4

6 What key steps should companies think about when launching big data initiatives? We believe that the most critical thing organizations need to do is have a plan or a roadmap. It's a commonplace saying, but it's hard to get to a destination if you don't have a map to get there. Because big data has become very popular very quickly, part of the reaction has been for executive committees of large organizations to call together the key managers and say, we don't know what this big data thing is, but we better be attacking it immediately. But that often creates a rush to find people as opposed to thinking through what big data means for their organization. At one very large financial services firm, we've heard that the next executive that uses the word "big data" without a very precise explanation of how it will be used for the organization will be fired. That's probably an overstatement, but the point is that there's been so much overuse and misuse of the term that organizations need and want to understand precisely how big data capabilities and big data initiatives will help them solve some of the top five business issues that they're trying to address right now, be it customer service activities or compliance reporting and systemic risk. Organizations need to take a step back and think about their key business drivers: What are they? Which ones would benefit from more sophisticated data-driven decision-making, in particular, the ability to iterate through data more rapidly and integrate new sources of data? And then think about how to put in place the processes and make sure they have the organizational alignment and skills to make that happen. Organizations that have a very clear view of what they're trying to achieve and how they're going to achieve it are going to have the greatest probabilities of success. Two other critical issues that were highlighted are the need to establish strong data management processes and practices, and to create a big data environment that can accelerate time-to-answer, which I mentioned before. Let me explain what we mean by that. We envision two data environments that coexist side by side. One is the traditional production operational environment, which has to be locked down -- think of Fort Knox. It's hard to get things in there, it's hard to get things out of there, but it's stable, it's what's used for financial reporting, regulatory reporting, customer statements, those types of activity. This is not information that you want to change or trifle with. It has to be bulletproof. But coexisting with that can be a "discovery" environment where analytics can be used to sift through new data and also to sift through traditional data, and this can be used to discern the new patterns that can later be incorporated within a production environment. So we call this "the new" and "the known." The new environment is focused on discovery, and the benefit that big data technology and processes bring is that it makes it possible to "load and go" -- which means beginning to access and analyze all of your data without first going through the data engineering process, which is costly and time consuming. The benefit is that organizations can answer critical business questions in seconds rather than days, days rather than weeks, and weeks rather than months. We had the opportunity to participate in a one-day special invitation big data day hosted by Accel Partners at Stanford University in May, and a number of the big data technology solution providers suggested that organizations could just load all of their data and "go," but it is not really that simple. It works within the discovery environment because you can rapidly accelerate your ability to iterate through data, but ultimately, you need to move into a traditional schema-based environment. You still need to eventually establish sound data management and data governance, as well as data preparation and data engineering processes and practices. 5

7 The "discovery" environment can be an analytics sandbox to rapidly accelerate your ability to discern new patterns and the ability to integrate with a traditional production environment that will feed and enrich one another. We see this as being how organizations will get the greatest value. David Kiron is executive editor of MIT Sloan Management Review's Big Ideas initiatives. Reprint Copyright Massachusetts Institute of Technology, All rights reserved. 6

Big Data Executive Survey 2013: The State of Big Data in the Large Corporate World Executive Summary With a Foreword by Thomas H. Davenport NewVantage Partners LLC www.newvantage.com Boston San Francisco

FALL 2012 VOL.54 NO.1 Thomas H. Davenport, Paul Barth and Randy Bean How Big Data is Different Brought to you by Please note that gray areas reflect artwork that has been intentionally removed. The substantive

BBBT Podcast Transcript About the BBBT Vendor: The Boulder Brain Trust, or BBBT, was founded in 2006 by Claudia Imhoff. Its mission is to leverage business intelligence for industry vendors, for its members,

INNOTAS EBOOK The Transformational CIO The Change Agent That Drives Business Strategy Table of Contents Introduction.... 3 Shifting the Focus to Strategic IT Projects.... 4 Adding Value Through IT Operations....

Big Data Executive Survey Creating a Big Data Environment to Accelerate Business Value Foreward Thomas H. Davenport I m pleased that NewVantage Partners conducted this survey and made the results available

Big Data and Business Intelligence: Organizations Hunt Actionable Insights to Improve Business Ops June 2013 Big Data and Business Intelligence: Organizations Hunt Actionable Insights to Improve Business

Big Data Executive Survey 2014: An Update on the Progress of Big Data in the Large Corporate World Summary Report With a Foreword by Thomas H. Davenport NewVantage Partners LLC www.newvantage.com Boston

Discover How a 360-Degree View of the Customer Boosts Productivity and Profits eguide eguide Discover How a 360-Degree View of the Customer Boosts Productivity and Profits A guide on the benefits of using

BIG BETS ON BIG DATA: WHO, WHERE AND WHAT At the top of Gartner s famed hype cycle, the peak of inflated expectations, the influencers of the world expect that technology will transform everything. Big

Boards and CEOs preparing for growth Almost half of the CEOs in Denmark s largest corporations consider the financial crisis to be over and expect positive growth in the near future. This calls for preparation

CISOs Share Advice on Managing Both Information Security & Risk Learn how CISOs from top companies are tackling their new dual role of information security & risk management WISEGATE COMMUNITY VIEWPOINTS

Best practices for evaluating and selecting content analytics tools Sponsored by IBM Speaker: Seth Grimes, a Business Intelligence and Decision Systems expert Moderated by Jonathan Gourlay, Site and News

white paper Business Intelligence and Big Data Analytics: Speeding the Cycle from Insights to Action Four Steps to More Profitable Customer Engagement»» Summary For business intelligence analysts the era

research@bluehillresearch.com @BlueHillBoston 617.624.3600 Anatomy of a Decision BI Platform vs. Tool: Choosing Birst Over Tableau for Enterprise Business Intelligence Needs What You Need To Know The demand

E-Guide Tips for adopting a private cloud strategy to overcome IT challenges and realize benefits Many companies have heard the hype around private cloud computing, but some may have a difficult time deciding

BBBT Podcast Transcript About the BBBT Vendor: The Boulder Brain Trust, or BBBT, was founded in 2006 by Claudia Imhoff. Its mission is to leverage business intelligence for industry vendors, for its members,

The Human Capital Management Systems Business Case A Checklist to assist agencies developing a business case Final version for release Human Capital Management See more at psc.nsw.gov.au/hcm Index - Business

About the research The report is based on a survey of 461 Europebased senior executives. Of these, 55 are from the education sector. Of the education sample, 40% are C-level executives or above and 35%

CORRALLING THE WILD, WILD WEST OF SOCIAL MEDIA INTELLIGENCE Michael Diederich, Microsoft CMG Research & Insights Introduction The rise of social media platforms like Facebook and Twitter has created new

Principles for a Successful Strategy Whitepaper NewVantage Point: Principles for a Successful Strategy Principles for a Successful Strategy NewVantage Point! is published by NewVantage Partners, a boutique

CFO reality check: Good intentions in cost management are not good enough By David A.J. Axson and Aneel Delawalla Nearly one-quarter of CFOs think that their companies as they exist today will die, according

Whitepaper Data Governance Roadmap for IT Executives Valeh Nazemoff The Challenge IT Executives are challenged with issues around data, compliancy, regulation and making confident decisions on their business

Talent Analytics Compare Your Talent against the Best in Your Industry How Effective are Your People Strategies? The largest proportion of an organization s expenditure is on its people. But how effective

BBBT Podcast Transcript About the BBBT Vendor: The Boulder Brain Trust, or BBBT, was founded in 2006 by Claudia Imhoff. Its mission is to leverage business intelligence for industry vendors, for its members,

BUSINESS ANALYTICS The Next Frontier in CRM Analytics Oracle Transactional Business Intelligence Enterprise for CRM Cloud Service Copyright 2014 Oracle Corporation. All Rights Reserved. The explosion of

Becoming Agile: a getting started guide for Agile project management in Marketing, Customer Service, HR and other business teams. Agile for Business www.agilefluent.com Summary The success of Agile project

Analytics: The Key to the Future Sponsored Material Hospitals and healthcare organizations of all sizes and structures are quickly elevating analytics to the enterprise level. But according to a recent

SUMMER 211 VOL.52 NO.4 Nina Kruschwitz and Rebecca Shockley First Look: The Second Annual New Intelligent Enterprise Survey REPRINT NUMBER 52413 THE NEW INTELLIGENT ENTERPRISE First Look: The Second Annual

Three Attributes of Every Successful Merchant Services Program-20140604 1602-1 [Start of recorded material] [Starts Mid Sentence] thank everyone that s joined the call today. I know everybody is busy with

What s Trending in Analytics for the Consumer Packaged Goods Industry? The 2014 Accenture CPG Analytics European Survey Shows How Executives Are Using Analytics, and Where They Expect to Get the Most Value

CITO Research End Small Thinking about Big Data SPONSORED BY TERADATA Introduction It is time to end small thinking about big data. Instead of thinking about how to apply the insights of big data to business

Employee Engagement Drives Client Satisfaction and Employee Success in In professional services, business success is achieved through employee success. Organizations that prioritize top talent gain competitive

State of Document Management Report July 2014 DOCURATED STATE OF DOCUMENT MANAGEMENT REPORT: VOLUME 1 Over the past 2 years, Docurated has had the pleasure of working in the trenches with Sales, Marketing,

NOT FOR REPRINT Click to Print or Select 'Print' in your browser menu to print this document. Page printed from: Corporate Counsel E-Discovery #NoFilter A Survey of Current Trends and Candid Perspectives

Global Survey: What s creating tension between IT and business leaders? April 2014 1 Research & Insights Executive summary If the marketing department is making its own decisions about an email marketing

DATA SHEET Security Awareness Training Solutions A guide to available Dell SecureWorks services At Dell SecureWorks, we strive to be a trusted security advisor to our clients. Part of building this trust

August 15, 2014 Vol. 5, No. 3 THE ADVANTAGES OF CLOUD BASED TECHNOLOGY FOR HEDGE FUNDS An interview with Steve Lewczyk, Cofounder at Nirvana Solutions In this issue we interviewed Steve Lewczyk, Co-founder

2014 Big Data Survey Exclusive Research from EXECUTIVE SUMMARY Big Data Strides Forward Companies place a high priority on their ability to harness data in the service of better business decisions. For

ceocfointerviews.com All rights reserved! Issue: June 8, 2015 The Most Powerful Name in Corporate News World s Largest Contact Center Metrics Database We have twenty years of experience leveraging metrics

How Boards of Directors Really Feel About Cyber Security Reports Based on an Osterman Research survey Executive Summary 89% of board members said they are very involved in making cyber risk decisions Bay

Services to Help You Achieve Your Goals Founded in 1996, Enterprise Management Associates (EMA) is a leading industry analyst and consulting firm that specializes in going beyond the surface to provide

HOW TO SELECT A BACKUP SERVICE FOR CLOUD APPLICATION DATA JUNE 2012 INTRODUCTION The use of cloud application providers or Software-as-a-Service (SaaS) applications is growing rapidly. Many organizations

Six Questions to Ask About Your Market Research Don t roll the dice ISR s tagline is Act with confidence because we believe that s what you re buying when you buy quality market research products and services,

Thomas H. Davenport March 2010 The New World of Business Analytics Copyright 2010 International Institute for Analytics Table of Contents Executive Summary Introduction 2 Issues with Traditional Business

A HARVARD BUSINESS REVIEW ANALYTIC SERVICES REPORT NEW TECHNOLOGIES TRANSFORMING THE FINANCE FUNCTION Copyright 2015 Harvard Business School Publishing. sponsored by NEW TECHNOLOGIES TRANSFORMING THE FINANCE

Matt Ariker, Nimal Manuel, and Marc Singer The big data trinity: Creating an analytics system to support a learning culture Marketing & Sales July 2015 As companies look to build up their test and learn

INCREASING THE STRATEGIC VALUE OF PPM THE KEY TO BUSINESS-DRIVEN PPM SUCCESS BUSINESS-DRIVEN WHITE PAPER SERIES Introduction Every organization has strategic business objectives but those that successfully

Professional Services for a Software-Defined Data Center Accelerating to a Software-Defined Data Center CIOs need people both internal staff and thirdparty providers who can help them think through their

IBM Software Business Analytics Social Analytics Social Business Analytics Gaining business value from social media 2 Social Business Analytics Contents 2 Overview 3 Analytics as a competitive advantage

1 11.1 Definitions and Motivation Lot of research and papers in this emerging field: Visual Analytics: Scope and Challenges of Keim et al. Illuminating the path of Thomas and Cook 2 11.1 Definitions and

Workforce Management: Controlling Costs, Delivering Results Organizations today must balance the need to run an efficient and costeffective operation while remaining agile and flexible to meet both customer

Asset management Your asset is your business. The more challenging the economy, the more valuable the asset becomes. Decisions are magnified. Risk is amplified. Data is about more than numbers. It tells

An Artesian Whitepaper This short paper talks about the subject of the semantic web, providing a definition and context and outlining how this can be exploited to drive commercial productivity particularly

Smart Machines Lead to Smarter Service: Remote Intelligence Signals Profitable Resolution The emergence of machine-to-machine (M2M) enabled equipment is driving a large growth of Field Service-based data

Dear Friends, This issue is all about Big Data to Knowledge, otherwise known as BD2K. This refers to society s growing ability to gather a wealth of information about people in our case, people with MS